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A stock certificate is used in corporate law. It is a legal document that will certify the ownership of a stock held by a corporation.

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What is a Stock Certificate?

A stock certificate is legal document that is used in corporate law. It certifies corporate stock ownership. This certificate can be paper or electronic. Not all shares are required to have a certificate; this will vary depending on the corporation size and amount of shares purchased.

A certificate of stock will list the name of the investor, the name of the corporation, and the number of stock shares that have been purchased by this party. The certificate will also include a seal of authenticity and a specific CUSIP or CINS identification number, which will ensure that the document is legal.  This document is also known as a share certificate.

Why use a stock certification template?

A certificate must contain certain elements to be valid.  To ensure that your certificates are valid, you have the option of hiring someone to draft one for you or downloading a free stock certificate template.

Templates make creating your certificates simple and straightforward.  Using a template takes much less time than drafting a certificate from scratch.  When creating your certificate, it is advisable to take a looks at sample stock certificates to get an idea of what the final version should look like.  It is important to have the final version checked by an attorney to make sure that it is valid.

Why do organizations issue stocks?

An organization will typically issue stock to raise money for a business.  A company may need to:

  • Merge with a new company
  • Decrease debt
  • Launch a new product
  • Hire more employees
  • Pay for new buildings
  • Pay for additional inventory

A company’s stock is typically managed by an investment banker.  An investment banker manages the relationship between an organization and its investors.  An investment banker can guide a company through the various federal and state regulations that govern all publicly traded organizations.

Companies that are public have an obligation to publicly publish some confidential information and keep their investors fully informed about what is happening with the company.  Individuals who purchase stock in a company become shareholders. Shareholders have rights that are governed by the management of a company.

Types of stock certificate templates

Registered stock certificates - This is issued to prove title.  It acts as a record for the shareholders. The information appears in the registration record for the organization that issues the stocks.  These certificates show the owner’s name, number of shares owned, date issued, CUSIP number, certificate number, and transfer agent.

Bearer stock certificates - This type of certificate is used for the bearer of the stocks.  They were typically used for shares that were purchased offshore. This type of certificate does not show the owner’s name or title.  They were difficult to replace if lost or stolen. These types of certificates are very rare.

Determining the value of stock certificates

If you have an old stock certificate, look for the company name, CUSIP number, location of incorporation, and name of the person with whom the certificate is registered.

Company Name - If the company is still in business, you can go to the company’s website and look them up on the stock exchange.  Check for an investor relations page for more information.

CUSIP Number - Each security has a unique CUSIP number.  Every time a security changes its name, reorganizes, splits, or does something that affects its stock, it receives a new CUSIP number.  If you search a security’s original CUSIP number, you will be able to locate the current equivalent. Most large brokerages are able help clients locate securities with the help of the CUSIP number.

Location of Incorporation - Each stock is incorporated in a state that maintains records.  Generally, the office of the Secretary of State manages a database with information about businesses that have been incorporated within the state.  You should be able to get additional information about your certificate from the Secretary of State’s office. You may be charged a fee for this service.

If you have located all of this information, get in touch with the company’s transfer agent.  The transfer agent will be able to help you ascertain the value of the certificates.

How to cash in stock certificates

If you decide to sell, you can sell it through a transfer agent or brokerage firm.  Before selling it, we recommend that you do research to find out how valuable the stock is. Verify that the company that issued the certificate is still in business.

Many companies have transfer agents to manage the companies and individuals who own stock in them.  A transfer agent is typically a trust or a bank. Transfer agents issue and cancel stock certificates, act as a middleman for paying interest and dividends, and manage lost or damaged certificates.

You can locate a company’s transfer agent by going to the organization’s website and looking at the investor relations page.  You can also opt to work with a private firm of transfer agents.

Once you locate a transfer agent, ask them for instructions on how to transfer your stock to direct registration.  A Direct Registration System (DRS) allows stock owners to manage their stocks in book entries with an agent instead of with paper certificates.  Once your certificates have been converted into the DRS, you can sell your stock at any time. You will have to mail the paper certificates to the transfer agent.  Send them via insured mail with tracking information.

Download a PDF or Word Template

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